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Daphné ARNAUD 8th November 2010
Reg.No. 2048312

Essay:
Poland’s Economy

EC3408: Europe and the World Economy
Yontem Sonmez

The year 1989 symbolizes the end of the Soviet bloc after the fall of the Berlin Wall in November and the beginning of the transformation process of the countries of Central and Eastern Europe. For this transformation to be successful the CEE countries must undertake political and economic transition, as did Poland from 1990. Poland, which has inherited from a planned economy based on heavy industry and agriculture with many state-owned enterprises, known then hyperinflation which ruined its economy. For this reason, the Vice-Chairman and Minister of Finance of the Polish government, Leszek Balcerowicz is implementing a policy to ensure the transition from planned economy to a market economy, capitalism itself. But what this new economy has been performing it since 1990. We see in the first part the performance of the Polish economy during the transition period from 1990 to 2004. Then we analyze its performance after the accession of Poland to the European Union. And finally, we'll see how Poland has faced the crisis of 2007.

First, to move from a planned economy to a market economy as the country of Western Europe, the Polish government set up the "shock therapy", also known as "Big Bang". Contrary to the theory of gradualism, the "Shock therapy" is to implement all reforms simultaneously. Indeed, this theory was to the rapid liberalization of prices, trade, programs of inflation stabilization and mass privatization. (Richard Portes, p.187) Being in a context of hyperinflation, the government must stabilize its macro-economic variables namely the rate of inflation in 1990 reached 686%, the unemployment rate corresponding to 6.3% the labor force, which was nonexistent before and above all to control its debt.

These reforms are very costly for the Polish government, so it puts in